VW Reduces Car Creation Time to 3 Yrs.

Halving Test Vehicle Production

Volkswagen is aiming to get an additional €10 billion (roughly $11B) by 2026. To achieve this, it’s slashing costs wherever it can and some major modifications are in the works. This is all part of the “Accelerate Forward/Road to 6.5” program, which will affect all levels of the firm. As you may recall, CEO Thomas Schäfer recently stated that VW is “no longer competitive”. By cutting back on expenditures, they hope to get back on track.

The first priority for Volkswagen is to reduce the period of time it takes to create a new car from the current 50 months to only 36. VW is confident that three years will be sufficient to produce a car “without sacrificing quality or safety.” This step alone should help the company save more than €1B (almost $1B) by 2028.

A remarkable transformation in processes is set to occur with yard-long reductions in the number of trial automobiles produced. Over the three-year creation phase, only half the amount of test vehicles are going to be assembled for assessment purposes comparatively. Volkswagen does not accept that this drastic move will adversely impact value. According to them, this initiative is expected to yield yearly savings of €400 million ($438M).

In order to revamp its fortunes, Volkswagen plans to implement a number of strategies, such as procuring more cost efficiently, improving the after-sales segment, and further streamlining production processes. These approaches are estimated to supply yearly savings of estimated €770M ($844M).

One of the most sensitive points of the immense savings plan by Volkswagen is the so-called “socially acceptable job cuts”. To achieve this, partial retirements will be proposed to employees born in 1967 and to severely disabled people born in 1968. In addition, the hiring freeze and the freeze on access to the Tarif Plus salary group will remain in place. The German corporation has set the goal of reducing administrative staff costs by 20 percent.

Volkswagen has expressed that these actions shall begin to show results come 2021.

Source: Volkswagen